Administrator Defends SBA Budget on Capitol Hill–Editorial

By Charles H. Green

It’s time to put my “outspoken” hat on again after reading about the hoopla going on at the National Zoo…er, make that House Small Business Committee. It seems that the SBA Administrator appeared before them this week to get grilled about the proposed FY 2016 SBA budget, which is pending before the committee.

Where to start? Lest you think this is a one-sided criticism, let me reassure you I have plenty of blather for both sides of the cell block.

Photo courtesy of

Photo courtesy of

Let’s start by reading the headlines written Kent Hoover, Washington Bureau chief for the Business Journals, who asks “Is SBA helping the rich get richer and leaving poor business owners behind?” Please.

That headline is borne of short-sighted bad mouthing by Rep. Nydia Velazquez (D-NY), the ranking Democrat, about the agency’s decision to to eliminate the Program for Investment in Microentrepreneurs (PRIME), which funds organizations that provide training and technical assistance to low-income business owners who employ five or fewer workers. In order words, a few micro lender grants that serve a relatively small number of prospective business owners.

Contreras-Sweet said she’s “simpatico” with Velazquez’s concern for serving underserved markets. In recent months, SBA has kicked-off efforts to work with community colleges to encourage millennials from minority groups to start businesses. Plus, the SBA has entered MOUs with two credit union associations on initiatives to boost availability to more SBA loans of less than $50,000.

Then enter the committee chair, Rep. Steve Chabot (R-Ohio) who quotes the committee’s official report on the budget, which noted they are “strongly concerned about the SBA’s use of its pilot program authority,” created to provide the agency with some measure of flexibility. “The SBA, however, abuses this authority.”

As reported by J.D. Harrison, for the Washington Post, Chabot specifically pointed to new entrepreneurial outreach programs, including the grants for early-stage business incubators, and the new online lender-to-borrower matching tool as examples of initiatives that were not approved by Congress and appear to duplicate programs run by other departments or non-governmental groups.

Bottom line

You have to admire Contreras-Sweet, who pushed back against the criticism. She pointed out that the agency has asked for permission to expand initiatives that help meet the needs of underserved entrepreneur populations. She also reminded the committee that her team is “doing more with less,” emphasizing that the SBA’s $860 million request for next year is about three percent lower than this year’s budget.

My opinion? The SBA has moved light years from the sleepy Podunk watering ground that it was 20 years ago, bloated with district offices that read the same SOP 64 different ways, and was often led by a defeated Senatorial candidate in search of a comeback somewhere else.

The House committee is criticizing them simultaneously for lowering funding to train entrepreneurs with a much lower ‘upside’ of success, while adding dollars to fund training for more advanced entrepreneurs who have a higher probability to succeed.

SBA has eclipsed many other federal departments–much greater in size–in meeting the needs of its stakeholders, while leveraging the rising engagement of the banking industry to deliver funding to entrepreneurs of little interest to many in the lending community. The results are more borrowers of all sizes, more training provided nationwide, and $28 billion in funding for the small business sector.

The House Small Business Committee, in my humble judgment, exemplifies exactly what we all hate about politicians. They are against any idea, if it wasn’t their idea.

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This entry was posted in AdviceOnLoan, SBA
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